The Delhi-Berlin Entente

THE INDO-GERMAN strategic partnership, dating back to 2000, has remained lacklustre, especially when compared with India’s dynamic ties with other Western partners like France and the US. Yet recent efforts are fundamentally altering this status quo.

Chancellor Olaf Scholz’s third visit to India—after a bilateral state visit last year and the G20 Leaders’ Summit—came on the heels of the German government’s first-ever policy paper on India. This document titled ‘Focus on India’, which acknowl­edges India’s growing international weight and refers to it as “a democratic partner of Germany for stability and security”, offers a blueprint to deepen Indo-German ties across a wide spectrum of areas from clean energy and multilateralism to security and technology. Unlike the German government’s more defensive China strategy which, based on varying perceptions of China, involved infighting within Germany’s “traffic-light” coalition, the process towards adopting Germany’s cooperative policy paper on India seems to have had widespread acceptance from parties across the German political spectrum.

The Chancellor’s three-day visit to India included a large entourage of ministers, including German Vice Chancel­lor and Economy Minister Robert Habeck, Foreign Minister Annalena Baerbock, and Labour Minister Hubertus Heil. On the eve of his visit, Scholz declared, “Our overall message is clear, we need more cooperation, not less.” With this spirit, the 7th Indo- German Intergovernmental Consultations (IGC) resulted in a rich outcome of 27 agreements on trade, critical technologies, renewable energy, defence, labour and research.

FREE FROM SHACKLES

As India’s relations with Europe become more strategic, defence and security have emerged as the newest dimension in Indo- German ties. Germany’s historical reticence towards security affairs meant that the country was relegated compared to other Europe­an partners like France. Russia’s war in Ukraine and the resultant German Zeitenwende (turning point) are now changing this equation. This is clearly evident in Germany’s decision to relax its stringent past policies on arms exports, and simplify licence requirements to sell military equipment to India. With Germa­ny’s approval of licenses worth 153.75 million euros, India was already the third-largest recipient of German arms in the first half of 2024. Germany is also keen to sign a reciprocal logistical support agreement between the two nations’ armed forces.

Contrary to expectations, Europe’s focus on Ukraine has not resulted in a subordination of the Indo-Pacific theatre, which is home to critical trade routes vital for an export-driven economy like Germany. This has resulted in strategic convergences with India given how both countries are invested in a free and open Indo-Pacific. In this geopolitical context, German company ThyssenKrupp Marine Systems is bidding to co-produce advanced conventional submarines for the Indian Navy, thereby also supporting India’s defence modernisation and Make-in-India goals. Scholz also made a symbolic touchdown in Goa, where the German frigate Baden-Württemberg is making a port call and Frankfurt am Main is participating in exercises with the Indian Navy, as part of broader German deployments in the Indo-Pacific. Like the UK, Germany also intends to deploy a liaison officer at the Indian Navy’s Information Fusion Centre for the Indian Ocean Region in Gurugram.

Differing positions on the Russia-Ukraine war have increased the frequency and substance of India’s interactions with Europe, and fostered greater understanding of Indian views and security compulsions. European countries, including Germany, are advanc­ing defence cooperation with India in favour of the twin goals of maintaining stability in the Indo-Pacific region, and supporting India to wean itself off Russian arms supplies.

ECONOMIC COMPLEMENTARITIES

Russia’s and China’s expansionist behaviour brought into question Germany’s Merkel-era policy of Wandel durch Handel (change through trade), which was based on the premise that greater interdependencies would moderate autocratic tenden­cies. This awakening has resulted in fundamental reassessments of Germany’s trade and energy dependencies.

The German government’s China strategy, released last year, focused on reducing critical dependencies on its largest trading partner, and diversifying economic relations in favour of more “likeminded” partners. This has resulted in a greater German interest in India, amid serious wider EU-China trade tensions and the West’s so-called China + 1 strategy. Germany is increasingly viewing India and its vast market as an alternative trading and manufacturing hub.

In contrast with a slowing Chinese economy, and a German economy where growth shrunk by 0.3 per cent in 2023, India’s rapidly growing economy is expected to overtake Japan and Ger­many to become the world’s third-largest economy should cur­rent trajectories continue. Yet, although Germany is India’s largest trading partner in Europe and the seventh largest globally, bilateral trade figures tell a stark story. In 2023, India’s trade with Germany stood at roughly 30 billion euros, while China’s trade with Germany valued almost 300 billion euros. Moreover, mixed signals in Ger­many’s China policy continue to confound observers, who view the country as the weakest link in the EU’s overall more hawkish China approach.

However, efforts to change this imbalance, amidst reports of top German companies such as DHL and Volkswagen’s expan­sions into India, are promising, especially when supplemented by improvements in India’s business environment, physical and digi­tal infrastructure, and cheap labour conditions. Against this back­drop, the IGCs this year coincided with the Asia-Pacific Conference of German Business in India, which saw over 650 business leaders from Germany and elsewhere participate.

ALLES KLAR, ALLES GUT

Migration is another area of complementarity. Estimates reveal that the German economy needs 400,000 workers annually from abroad. India’s technically skilled workforce could plug the gaps in Germany’s ageing society and manpower shortages. In 2022, the two countries signed the Migration and Mobility Partnership Agreement, and Berlin has decided to increase visas for Indian talent from 20,000 to 90,000.

India and Germany already have a strong partnership in the development, climate and energy sectors, guided by the Green and Sustainable Development Partnership. This visit has seen fresh initiatives, such as the Green Hydrogen Roadmap being brought under its aegis. Yet it is Germany’s newfound willingness to become an important security partner for India, through a strengthening of the bilateral defence industrial partnership, that is currently driving this fresh momentum in ties. Moreover, as India’s economy contin­ues to expand, Germany can become a full-fledged stakeholder in India’s growth story. Harnessing societal, economic and military complementarities can ensure that the Delhi-Berlin entente goes a long way.

As summed up by Prime Minister Narendra Modi, “Alles klar, Alles gut” in Indo-German ties.

About The Author

Harsh V Pant

Harsh V Pant is Vice President, Studies and Foreign Policy, at Observer Research Foundation (ORF), New Delhi

Shairee Malhotra